Budgeting for a Reverse Mortgage

Reverse mortgages have helped many seniors find the extra income they need to remain in their homes. The income received from a reverse mortgage can go toward household bills, medical expenses, home repairs, transportation, and other financial obligations. But if you decide to get a reverse home mortgage, it’s important to put together a household budget to make your money stretch as far as possible.

Setting up a Budget

Don’t expect a reverse loan to solve all your financial woes if you don’t have a plan for managing your money. Working on a budget can allow you to compare your current income and expenses to see how a reverse mortgage can help. When your expenses are greater than your income, problems can occur, such as having too much credit card debt.

Evaluate your spending habits to see if you need to cut back on certain expenses even before you obtain a reverse loan. Are you spending too much money on entertainment? Do you travel several times a year? Also determine which of your bills are priorities. For example, do you have major medical expenses that you hope to pay for with the proceeds of a reverse loan? Choosing to borrow with a reverse mortgage is a huge step, so it’s important to understand exactly what impact it can have on your finances.

Reverse Mortgage Counseling

Reverse mortgage counseling is required before you can actually apply for a loan. A reverse mortgage counselor can work with you to discuss reverse mortgage pros and cons. The counselor should go through your budget and explain reverse mortgage guidelines. He or she should discuss other alternatives to borrowing money through a reverse loan, such as local assistance programs.

Part of your fact-finding mission should involve comparing different loan offers from reverse mortgage lenders. You can get free no-obligation quotes here.

This entry was posted on Wednesday, December 16th, 2009 at 1:47 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.